International Journal of Technology (2018) 5: 1072-1084 ISSN 2086-9614 © IJTech 2018
HALAL LOGISTICS PERFORMANCE AND CUSTOMER LOYALTY: FROM THE
LITERATURE REVIEW TO A CONCEPTUAL FRAMEWORK
Ilyas Masudin1*, Faradilla W. Fernanda2, Widayat2
1Department of Industrial Engineering, Faculty of Engineering, Muhammadiyah University of
Malang, Jl. Raya Tlogomas 246, Malang 65144, Indonesia 2Postgraduate Program of Management, Muhammadiyah University of Malang, Jl. Raya Tlogomas
246, Malang 65152, Indonesia
(Received: April 2018 / Revised: May 2018 / Accepted: July 2018)
ABSTRACT
Customer loyalty has become the most important goal of companies’ logistics and supply chain
divisions. In a Muslim country such as Indonesia, halal products have the potential power to
foster customer loyalty. Halal status highly depends on halal logistics, especially with regard to
halal meat products. A good halal meat product depends on good halal logistics performance.
The influence of logistics performance on loyalty has been investigated in many marketing
studies, but research in the field of halal logistics is rare. The research gap in this area has
become the background for this conceptual paper. The main purpose of the paper is to provide a
literature review of halal logistics performance and customer loyalty, thereby establishing the
issues concerning both subjects. The review also provides a conceptual framework for the
study, including other factors affecting customer loyalty, such as halal supplier service quality,
perceived service value, and customer satisfaction.
Keywords: Customer loyalty; Customer satisfaction; Halal logistics; Logistics performance;
Perceived service value
1. INTRODUCTION
Many logistics and supply chain management researchers have claimed that customer loyalty
has economic and social impacts on companies (Gwinner et al., 1998; Mimouni-Chaabane &
Volle, 2010). This is because loyal customers help to maintain a company’s market position,
and often repurchase its products, even premium ones (Ngobo, 2016). That is why establishing
loyalty is important as a strategic goal in all service (Gustafsson et al., 2005; Cooil et al., 2007).
Therefore, many scholars have attempted to ascertain what factors contribute to loyalty
(Zeithaml et al., 1996). One of these is logistics performance. This factor is investigated by
researchers such as Mentzer et al. (2004), Richey et al. (2007), Stank et al. (2003), Day (2000),
and Mattila (2001).
The relationship between logistics performance and loyalty is explained by Mentzer et al.
(2004), Lai et al. (2009) and Hartono et al. (2017). They state that improving product quality
through improvement in the performance of logistics activities will increase customer
satisfaction. This means that logistics performance, which is one of the main factors influencing
customer satisfaction, will in turn affect the loyalty of customers. Stank et al. (2003) concur that
good logistics performance will create value for customers. However, firms must know exactly
what type of logistics is useful in the market. Muslim countries such as Indonesia and Malaysia
*Corresponding author’s email: [email protected], Tel. +62-81232385876, Fax. +62-341460435 Permalink/DOI: https://dx.doi.org/10.14716/ijtech.v9i5.1919
1073 Halal Logistics Performance and Customer Loyalty: From the Literature Review to a Conceptual Framework
require halal products, which need halal logistics to maintain their halal status. This is
especially the case for meat products, which need more complex halal logistics than other
products because halal meat status starts from feeding cattle with halal food, up to halal meat
displays in traditional and modern markets. Good halal logistics performance will improve halal
meat product quality and create greater Muslim customer satisfaction. The research of Kumar et
al. (2013), Aktepe et al. (2015), Kaura et al. (2015), Islam et al. (2016) has proven that
customer satisfaction has a positive and direct effect on customer loyalty.
However, because halal logistics is still a new topic for scholars and practitioners, the amount
of research in this area is still limited (Jaafar et al., 2016). Research in halal logistics and
marketing still concerns customer perception (Tieman et al., 2013; Alqudsi, 2014), market
analysis (Lever & Miele, 2012), and retailer behavior (Kalantari et al., 2014). In this study,
other factors that influence customer loyalty are discussed in five sections. Section 1 (the
introduction) discusses the conceptual frameworks of customer loyalty and halal logistics
performance developed in previous studies. The remainder of the study will be organized as
follows: Section 2 discusses the halal meat market; the research methodology is presented in
section 3; Section 4 presents the discussion; and the study is summarized in section 5 together
with the conclusion.
2. LITERATURE REVIEW
2.1. The Halal Meat Market and Halal Meat Logistics Requirements Before discussing halal meat, it is important to understand the halal food market. The main
target of halal food marketing are Muslim customers. Grim and Karim (2011) estimated that the
Muslim world population by 2030 will have reached 2.2 billion, or 26.4% of the total world
population. The global halal market has grown very rapidly recently, coinciding with the
accelerating development of Islam (Izberk-Bilgin & Nakata, 2016). Muslim customer spending
on food and beverage products is expected to have grown from $1.17 trillion in 2015 to $2.6
trillion by 2020 (Thomson Reuters, 2016). However, because the quantity of halal products is
still limited, some Muslim countries have to import these from non-Muslim majority countries
(Soesilowati, 2011). A study by Haque et al. (2015) showed that higher exports of halal food
products from non-Muslim majority countries indicates that the market for halal food products
in Muslim countries is growing rapidly. For example, the majority of halal meat and poultry
products are currently produced by non-Muslim countries such as Australia, Argentina, Brazil,
Uruguay and New Zealand, with most exported to Muslim countries (Zulfakar et al., 2017).
This indicates an opportunity for Indonesia, as the world’s largest Muslim country and major
halal market, to be also a major producer of halal products (Soesilowati, 2011).
Meat is one of the major sources of protein and has social meaning in most communities
(Fiddes, 1992). For Muslims, halal status is the major requirement before making a decision to
purchase meat (Nakyinsige et al., 2012). “Halal” is a term which means permitted and allowed
according to Islamic jurisprudence (Omar & Jaafar, 2011), and is not only applied to physical
products, but also to the process of production, distribution and sale (Kirwan, 2006). Therefore,
the term halal refers to meat that is permitted to be consumed if the manufacturing process and
meat quality are in accordance with Islamic jurisprudence. The process involves feeding halal
food to cattle, halal slaughter processing, halal meat processing, and display in markets.
Because the process is very complex, halal meat is vulnerable to becoming non-halal.
Because of this vulnerability, the demand for halal meat is high, especially from Muslim
customers in non-Muslim majority areas. Jusmaliani and Nasution (2009) investigated Muslim
customer behavior towards halal meat products in Jakarta and Melbourne. Their results show
that halal meat availability is the only significant determinant factor in the behavior of Muslim
Masudin et al. 1074
customers in the two cities. In non-Muslim majority areas, halal processing (halal logistics) is
mostly not used as a standard in the preparation of halal products, which makes it more difficult
for Muslim customers to purchase products. Stitou and Rezgui (2012) conducted research on
the Muslim community in France; their results show that 56% of the 223 Muslim respondents
would not purchase a product if they were in any doubt about its halal status. Otherwise, 87%
of respondents were willing to pay for a product that was guaranteed to be halal. This indicates
the requirement for halal logistics from Muslim customers, especially in non-Muslim majority
areas, even if it is more expensive than conventional logistics.
The willingness to pay for good halal logistics performance has been investigated in research by
Kamaruddin et al. (2012), Tieman et al. (2013), and Fathi et al. (2016). Customers’ perception
of halal meat logistics was investigated by Tieman et al. (2013). Their research compares
Muslim consumer behavior in Malaysia (a Muslim-majority country) with that in the
Netherlands (a non-Muslim majority country). They found that Muslim consumers in Malaysia
were more willing to pay for and request a higher segregation level than Muslim consumers in
the Netherlands. However, the research obtained similar results to those of Stitou and Rezgui
(2012) and Kamaruddin et al. (2012), finding that Muslim consumers are concerned about and
are willing to pay for halal logistics, both in a Muslim-majority and non-Muslim majority
countries. Research by Fathi et al. (2016) investigated the drivers of consumers’ willingness to
pay for halal logistics. According to their results, halal logistics certification of 3PL provider
was the key factor in this willingness. Service capability and the image of 3PL are insignificant
factors in creating the intention to pay for halal logistics, which indicates that companies should
educate current/potential customers on halal logistics and emphasize its importance (Fathi et al.,
2016).
3. METHODOLOGY
The review is limited to published literature, including theses and journals from Emerald,
Elsevier, Google Scholar, etc. Keywords such as halal logistics, halal meat, loyalty, and
customer satisfaction were used to find related studies. A special report that includes the halal
food topic was used in the study, as the academic papers published on this subject matter are
still limited. Only the few studies written in English are analysed, while some publications
related to the study might not have been included. The number of sources needed to develop the
framework was 104, with publication years ranging from 1988 to 2017. The type of
publications reviewed can be divided into two classifications: 102 academic journal articles and
2 theses. From these, the articles were differentiated according to the main themes of the study,
as shown in Table 1.
3.1. Developing a Conceptual Framework
Previous studies have found that the conventional factors of logistics operational performance
such as product availability, product condition, delivery reliability and speed and service
responsiveness positively affect customer satisfaction, customer loyalty and customers’
repurchase intentions (Wang & Sarker, 2006; Yuen, 2006). Moreover, in manufacturing five
components of logistics performance measurement, namely asset management, cost, customer
service, service quality and productivity, are the key components that can help a firm to build
customer satisfaction and loyalty (Davis, 2006; Man, 2006; Wenbao, 2007; Fawcett et al.,
2008).
Halal logistics performance and customer loyalty are rare topics in marketing and halal logistics
research. For the purpose of developing a conceptual framework, research by Liang (2008) and
Siu and Cheung (2001) are used as the main references. Liang (2008) investigated the
relationship between logistics performance and customer loyalty in tourism; however, for halal
1075 Halal Logistics Performance and Customer Loyalty: From the Literature Review to a Conceptual Framework
logistics performance, this needs to be adapted by using the retail service quality measure by
Siu and Cheung (2001). There are five variables: halal logistics performance; halal suppliers’
service quality; perceived service value; customer satisfaction; and customer loyalty. Each
variable will be discussed in the five sections below.
Table 1 Main themes of publications
Literature Main Theme
Component Antecedents
Aktepe et al. (2015) Customer satisfaction Customer loyalty
Islam et al. (2016) Customer satisfaction Customer loyalty
Kumar et al. (2013) Customer satisfaction Customer loyalty
Lin & Hsieh (2006) Customer satisfaction Customer loyalty
Kaura et al. (2015) Customer satisfaction Customer loyalty
Gallarza & Saura (2006) Perceived value Customer satisfaction
Jhandir (2012) Perceived value Customer satisfaction
Cronin et al. (2000) Service quality Perceived value
Parasuraman & Grewal (2000) Service quality Perceived value
Hartline & Ferrell (1996) Personnel service quality Service quality
Buhalis & Law (2008) Information system availability Service quality
Kisperska-Moron (2005) Product availability Service quality
Baker & Crompton (2000) Service quality Customer satisfaction
Lee & Taylor (2005) Service quality Customer satisfaction
Teh & Cabanban (2007) Service quality Customer satisfaction
Man (2006) Logistics performance Customer satisfaction and loyalty
Wang & Sarker (2006) Logistics performance Customer satisfaction and loyalty
Stank et al. (2003) Logistics performance Customer satisfaction and loyalty
Hovora (2001) Logistics performance Customer satisfaction and loyalty
Liang (2008) Logistics performance Customer satisfaction and loyalty
Davis (2006) Service quality Service performance
Richey (2003) Service quality Service performance
Stank et al. (1999) Service quality Service performance
Mentzer et al. (1999) Dimension of logistics performance Logistics performance
Figure 1 Conceptual framework of the factors that influence customer loyalty
Halal Information
Systems
Availability
Halal Product Availability
Customer
Satisfaction
Customer
Loyalty
Halal
Suppliers’ Service Quality
Perceived
Service
Value
Halal Logistics
Performance
Personnel
Contact
Quality
Information
Quality
Order
Condition Order
Quality
Order
Discrepancy
Masudin et al. 1076
4. RESULTS AND DISCUSSION
4.1. Halal Logistics Performance
Halal logistics involves five stages of logistic activities, which apply the halal concept from the
point of origin to the point of consumption (Omar & Jaafar, 2011). To ensure that the halal
concept is applied, halal certifiers must monitor all halal logistics activities. Examples of halal
certifiers include Majelis Ulama Indonesia (MUI) and Jabatan Kemajuan Islam Malaysia
(JAKIM), which are both operated by their respective governments. However, some countries
use private halal laws and halal certifiers from private institutions, such as the Netherlands and
the United States (Dahlan & Sani, 2016). They will monitor all halal logistics activities at the
breeding farms and abattoirs, and at the time when the halal meat is distributed and sold to
domestic customers, halal meat importers, and the food industry (Omar & Jaafar, 2011).
To build customer satisfaction and loyalty, logistics providers need to develop good logistics
performance (Liang, 2008). According to Davis (2006), competitive advantage which is built by
stronger customer relationships can be generated from good logistics performance. Logistic
providers’ ability to handle the ordering process will be measured by logistics performance
(Stank et al., 1999; Mentzer et al., 2001; Stank et al., 2003; Mentzer et al., 2004; Ketikidis et
al., 2006; Man, 2006). This performance is measured by the nine parameters of logistic service
quality (LSQ) developed by Mentzer and Williams (2001). These concepts are personnel
contact quality; order release quantities; information quality; ordering procedures; order
accuracy; order condition; order quality; order discrepancy handling; and timeliness (Mentzer et
al., 2001; Stank et al., 2003; Mentzer et al., 2004; Davis, 2006; Bienstock et al., 2008).
However, the subjects of our research are the end consumers of halal meat products. That is
why the concepts need to be adopted so that they can be measured by the customer. Ordering
procedures, timeliness, etc. cannot be measured because the customer cannot see them. To
adapt the concepts, the research of Cheung (2001) is used. Therefore, the concepts used for
halal logistics performance are personnel contact quality, information quality, order quality,
order condition, and order discrepancy.
Personnel contact quality refers to customers’ valuation of the treatment they receive from
logistics suppliers’ contact staff (Mentzer et al., 1999). It also refers to customers’ perspective
of how disrespectful personnel may be with regard to problems and situations facing them
(DeCarlo & Leigh, 1996; Hartline & Ferrell, 1996). Tieman and Ghazali (2013) state that the
foundation of halal logistics and the supply chain can be identified by direct personnel contact
with a non-halal or haram (prohibited) substance, and contamination risk of the products.
Moreover, a study by Ab Talib et al. (2015) found that halal personnel are the key reference
point for religious customers to decide whether to purchase halal meat products.
Information quality refers to customers’ perception of information about products which they
may choose (Mentzer et al., 1999). Consumers will make decisions easily if information on
products is available and complete (Mentzer et al., 2001). Information quality must be accurate,
reliable and complete to support good logistics performance (Jie et al., 2012; Mohammadi &
Mukhtar, 2018). The halal critical points discussed by Lodhi (2010) identify that information
quality in terms of complete tractability and a monitoring system of halal products throughout
the entire halal meat supply chain should be available. This is in line with the findings of the
study by Ab Talib et al. (2015), which shows that, similar to conventional logistics, information
technology is also an important element for halal logistics performance.
Order quality refers to how well suppliers fulfil customers’ needs with regard to a product and
how well the products work (Novack et al., 1994; Mentzer et al., 1999). Order condition refers
to the condition of products (their damage level ) (Mentzer et al., 1997). The difference between
order quality and order condition is that order quality assesses how well products are made,
1077 Halal Logistics Performance and Customer Loyalty: From the Literature Review to a Conceptual Framework
while order condition assesses products’ level of damage caused by the delivery process
(Mentzer et al., 2001). An investigation by Wan Omar (2017) found that halal supply chain
implementation performance is defined by the condition of the halal product as a result of the
handling and delivery processes.
Order discrepancy refers to how well logistics providers handle any discrepancy after the order
has reached customers (Rinehart et al., 1989). A study by Du and Tang (2014) developed a
framework of how order discrepancy is one of the factors affecting customer satisfaction and
loyalty. A framework and conceptual paper by Selim et al. (2018) consider order discrepancy
handling as one of the drivers for successful halal logistics service quality.
4.2. Halal Meat Supplier’s Service Quality
Positive service quality will generate positive word of mouth and repurchase behavior, which
leads to customer loyalty (Liang, 2008). Similar findings were made by Chacko et al. (2006),
who state that improving order and delivery efficiency and accuracy will improve customers’
repurchase intention. The definition of service quality according to Su (2004) is how well
customer needs are fulfilled by the service. Service quality can also be an accurate evaluation of
all stages and operations when creating a service (Garvin, 1984). After the service is provided, a
customer will measure how well it has met their expectations (Grönroos, 2000). In most
service quality literature, expectation is defined as normative standards which meet future
customer’s needs (Boulding et al., 1993).
If a company provides bad quality service to a customer, the customer will avoid it, even if the
company creates good promotions or campaigns (Berry & Parasuraman, 1991). But if
customers like the service, it will be an important advantage in market competition and will
have greater effects than product quality and product price (Parasuraman & Grewal, 2000). In
this study, service quality refers to how well halal meat suppliers provide their service, which is
measured by two dimensions: information system availability and product availability.
Information system availability plays an important role in connecting suppliers with customers.
It will be easier for customers to decide which products they want to buy with the help of the
information system provided by suppliers (Liang, 2008). Product availability is an important
element in service quality and will help to improve customer satisfaction (Mentzer & Williams,
2001; Kisperska-Moron, 2005)
4.3. Perceived Value
The concept of value was introduced in the 1990s and since then it has become a general topic
in marketing research (Sánchez-Fernández & Iniesta-Bonillo, 2007). The definition of
perceived value is customers’ valuation of product functions based on their perception of the
product price and the benefits received after using it (Zeithaml, 1988; Chahal & Kumari, 2012).
Perceived value can also be an evaluation of product benefit, cost, and the efforts that are
needed for further analysis of a product (Daskin & Kasim, 2016). According to Lee and Taylor
(2005), a product has perceived value if: (1) its price is low; (2) it provides everything that a
customer wants; (3) its price is proportional to its quality; and (4) the effort needed to buy is
proportional to the product benefits. In line with this, Oh (2003) states that most consumers are
concerned about price, quality, risk and the time spent when deciding to buy a product.
The perceived value of halal food consumption can be compared with the perceived value of
organic food. When a consumer buys organic food, they assume that it is more delicious,
healthier, and more environmentally friendly than non-organic food (McEachern & McClean,
2002). Similarly, halal food consumers assume that by choosing a halal product it will make
give them more peace of mind because they have obeyed religious rules in doing so (Jamal &
Sharifuddin, 2015). The interview results of their study show that Muslim customers expect
suppliers to add a halal label to their halal products because it will make it easier for them to
Masudin et al. 1078
select and buy the product. That is in line with the research results of Chahal & Kumari (2012)
that show that perceived value has a positive impact on the intention to patronize a product,
which leads to loyalty.
4.4. Customer Satisfaction Customer satisfaction is an essential and a fundamental element in marketing (Brady &
Robertson, 2001; Kotler & Armstrong, 2004). It is essential because it is very important for a
marketer to fulfil customers’ needs and desire for a product (Han & Ryu, 2009). Paul et al.
(2016) define customer satisfaction as a mental state in which a customer compares
expectations before the purchase with their perception of product performance after the
purchase. This valuation depends on product availability, information and demand. Customers
will then compare expectations and perceptions based on these three factors. If customer
expectations are fulfilled by the product performance, there will be positive perceptions of
customer satisfaction (Lenka et al., 2009; Jhandir, 2012). Customer satisfaction is not a
guarantee of repeat business, but the most dissatisfied customers will not buy again (La, 2005).
Therefore, many industries use customer satisfaction as a criterion for assessing product
performance (Anderson & Sullivan, 1993). It can also serve as an exit barrier to protect
customers from competitors’ products (Gundersen et al., 1996). Satisfied customers tend to buy
products from their chosen producer because if they switch to another product there will be the
risk that it does not fulfil their expectations (Selnes, 1998).
4.5. Customer Loyalty
According to Oliver (1999), the definition of customer loyalty is the commitment to repeat
purchase or patronize a product or brand consistently, although competitors or other situations
could potentially cause customers to switch to other products. If the brand is not available on
the market, consumers who are loyal will not instead buy another product (Patel & Desai,
2016). The implications of consumer loyalty to a company include increasing revenues;
reduction in the cost of new customer acquisition; and lower costs involved in handling repeat
purchasers (Reichheld & Sasser, 1990). The manifestation of customer loyalty in most
marketing literature is repurchase behavior (Hennig-Thurau et al., 2002; Walker & Francis,
2002; Yüksel & Yüksel, 2007; Chi & Qu, 2008; Litvin et al., 2008). However, according to
Knox and Walker (2001), repurchase behavior is behavior that shows that customers repeatedly
purchase products from the same company, while loyalty is more complex because it involves
two components: psychology and behavior. In line with this, Liang (2008) argues that loyalty is
not just a customer behavior on purchasing product, word of mouth and positive comments, but
that not wanting to move to another product is also an indicator of customer loyalty (Liang,
2008).
5. CONCLUSION
The relationship between customer loyalty and logistics performance for halal meat products is
an uncommon topic in the marketing research and halal logistics literature. This study offers a
conceptual framework developed through relevant logistics and marketing literature. It will be
very interesting for other researchers to improve this framework by taking a closer look at other
factors that can influence customer loyalty. Moreover, this study could be investigated in
greater detail to prove and improve the factors involved. The publication from research
methodology can also be explored in future studies to fill the knowledge gap in this subject.
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